Banking on Bytes: Achieving Success through Responsible Tech Adoption

January 23, 2024

In the dynamic world of banking, success is increasingly defined by the strategic adoption of technology. A strong correlation between a bank's technology choices and its overall performance has been found, emphasizing that success hinges not on spending more on technology but on the deft use of it.

According to a recent analysis by Bain & Company, banks leading in technology consistently outperform their peers across key metrics. These tech leaders deliver an average of 5 percentage points higher total shareholder return, boast a 10 percentage points lower cost-to-income ratio, and command a remarkable 12 points higher Net Promoter Score℠. The numbers speak volumes, underscoring the pivotal role that technology plays in shaping a bank's financial success and customer satisfaction.

Moreover, the landscape is evolving, with software now emerging as the second largest expense in banks, accentuating the critical role of technology in the financial sector. The allocation of significant resources to software underscores its transformative power and the recognition that it is not merely an operational tool but a cornerstone in shaping the future of banking.

Creating tangible value from technology is not a one-size-fits-all endeavor. It requires sustained simplification, low-cost and adaptable processes, and an exceptional digital experience for customers. Banks that prioritize these elements find themselves not only at the forefront of tech innovation but also in a position to create enduring value for their customers and stakeholders.

That’s why we, at Entrio, feel that responsible tech adoption is the only option for banks and financial institutions going forward. Responsible tech adoption, driven by a keen awareness of budget constraints, dictates a careful consideration of existing software assets before venturing into new solutions. It ensures that technology usage is optimized and unnecessary expenses are eliminated. It is the key to enabling the finance world to evolve its stack of technologies with transparency, efficiency, and agility, ensuring sustainable growth for the business. 

Based on our experience working with tier-1 banks, here are some best practices for responsible tech adoption: 

Sustained Simplification 

Optimizing the tech stack is not a one time project, it requires a long term approach. To start with, there are many solutions that we consider to be in the ‘long tail’ of an organization's tech stack; these represent an unnecessary group of niche products that often have overlapping capabilities and create an internal mess. Reducing the prevalence of these solutions ensures the organization is focused on preferred vendors and solutions that are creating the highest value at minimum cost. But vendor and solution consolidation decisions should be made overtime as well, as contracts are up for renewal and should be continuously reviewed as offerings expand or advance. 

Ruthless Reuse 

Maintaining a simplified tech stack requires the ruthless reuse of solutions already embedded within your organization. A ‘used before new’ mentality must be driven from the top down and be backed up with internal resources and processes. In order to drive awareness and adoption of current solutions, it must be easy for all departments in your organization to search for and view them. A centralized permit to buy process must also have an embedded reuse check step, alerting the team to any existing capability overlap before adding a new solution to the stack. 

Maintained Data Integrity

Placing a strong emphasis on enterprise data integrity is the backbone of an organization’s ability to responsibly adopt technology. There are two key elements of data integrity, removing data silos and robust categorization. First, a single source of truth must be established, connecting the disparate data sources in the organization from sourcing, finance, IT and TPRM. Then the solutions must be categorized by an accurate and granular taxonomy, at minimum, but an always updating solutions catalog (including a robust taxonomy) ensures that the information is also fresh and dynamic. Combining these elements, leads to clear visibility and data-driven decision-making, enabling tech leaders to make informed choices that align with the organization's strategic goals and values. 

The journey to operational efficiency and optimal business results is intricately woven with the threads of responsible tech adoption. Embracing sustainable practices and making informed choices paves the way for enduring value creation. At Entrio, we believe that the responsible integration of technology not only transforms banking operations but also fosters transparency, efficiency, and agility, ensuring a future where innovation and responsibility coexist harmoniously for the benefit of customers and stakeholders alike. 

Avi Cohen
Co-founder & CEO